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Facts
M/s. Brahmananda Enlightenment Trust, a charitable trust with existing registration under Section 12AB and provisional approval under Section 80G, applied for final 80G approval. The CIT(E) rejected this application, asserting that no substantial charitable activities were carried out by the assessee, which led the trust to appeal before the ITAT.
Held
The Tribunal set aside the CIT(E)'s order, finding it lacked specific reasons for rejecting the evidence and violated principles of natural justice. The matter was remanded to the CIT(E) for fresh adjudication of the 80G application, with directions to verify primary evidence like bills and vouchers and to consider judicial precedents, passing a speaking and reasoned order after granting adequate opportunity to the assessee.
Key Issues
Whether the CIT(E) was justified in rejecting the final 80G approval application solely on a general observation without specifically addressing the evidence provided, and whether a remand for detailed verification and fresh adjudication is required.
Sections Cited
12AB, 80G, 80G(5)(iv)(B), 13(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by M/s. Brahmananda Enlightenment Trust (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Exemptions), Hyderabad (“Ld. CIT(E)”), dated 11.12.2024 for the A.Y. 2025-26. 2. The assessee has raised the following grounds of appeal :
1. 3. The brief facts of the case are that the assessee is a charitable trust, has been granted registration under section 12AB of the Income Tax Act, 1961 (“the Act”) vide Form No. 10AC dated 24.09.2021 for the period from Assessment Year 2022–23 to Assessment Year 2026– 27. The assessee was also granted provisional approval under section 80G of the Act in Form No. 10AC dated 23.04.2024. Subsequently, the assessee filed an application for final approval under section 80G in Form No. 10AB before the Ld. CIT(E). However, the Ld. CIT(E), after examining the application, rejected the assessee’s application on the ground that no substantial charitable activities had been carried out by the assessee.
4. Aggrieved by the order of Ld. CIT(E), the assessee has preferred the present appeal before the Tribunal. During the course of hearing, the learned Authorised Representative (“Ld. AR”) of the assessee submitted that the assessee trust had duly responded to all notices issued by the office of the Ld. CIT(E) during the proceedings. It was contended by the Ld. AR that, adequate documentary evidence was filed before the Ld. CIT(E) to substantiate that the assessee had indeed undertaken charitable activities and was therefore eligible for approval under section 80G of the Act. In support of his submission, the Ld. AR drew our attention to the following documents placed in the paper book: i) Activity report of the trust for the relevant years – placed at page nos. 5 to 12 of the paper book; ii) Audited financial statements of the trust for FYs 2018–19 to 2023–24 – placed at page nos.13 to 30 of the paper book; iii) Acknowledgments and covering letters submitted before the Ld. CIT(E) - placed at page nos. 31 to 43 of the paper book. 4.1 The Ld. AR further submitted that, all these documents demonstrate that the assessee is engaged in genuine charitable activities, and no adverse finding had been made by the Ld. CIT(E) as to their authenticity or correctness. In support of legal contention, the Ld. AR relied on the following judicial precedents:
1) CIT (Exemption) Vs. Mata Padmavati Shyadaya Charitable Trust [(2018) 101 taxmann.com 82 (Raj.)] – placed at page nos.1 to 5 of the case law paper book;
2) Order of this Tribunal in the case of Sri Ganga Charitable Trust Vs. CIT(E) in dated 06.05.2025 – placed at page nos. 6 to 12 of the case law paper book;
3) Order of this Tribunal in the case of Fighting First Trust Vs. CIT( E ) in & 170/Hyd/2025, dated 04.06.2025 – placed at page nos. 13 to 16 of the case law paper book.
4.2 Referring to the above case laws, the Ld. AR prayed that the approval under section 80G be granted to the assessee.
Per contra, the Learned Departmental Representative (“Ld. DR”) submitted that the documents filed by the assessee require detailed verification with reference to bills and vouchers, to establish whether the assessee has actually undertaken genuine charitable activities. The Ld. DR further contended that, it is necessary to examine whether the expenses claimed in the financial statements were actually incurred for charitable purposes and whether any part of such expenditure was incurred for the benefit of persons specified under section 13(1)(c) of the Act. Therefore, the Ld. DR submitted that the matter may be set aside to the file of the Ld. CIT(E) for thorough verification and adjudication of the issue on merits.
We have heard the rival submissions and also gone through the record in the light of the submissions made by either side. We note that the assessee trust has been granted registration under section 12AB of the Act vide Form No. 10AC dated 24.09.2021, which covers the period from A.Y. 2022–23 to A.Y. 2026–27. The assessee was also granted provisional approval under section 80G in Form No. 10AC dated 23.04.2024. The assessee applied for final approval under section 80G in Form No. 10AB, and in support of such application, the assessee had filed several documents before the Ld. CIT(E), including:
i) Activity reports (page nos. 5–12 of the paper book); ii) Audited financial statements for FYs 2018–19 to 2023–24 (page nos. 13–30 of the paper book); iii) Acknowledgements and covering letters (page nos. 31–43 of the paper book). 6.1 On going through the impugned order of the Ld. CIT(E), we find that no specific discrepancy or defect has been pointed out in any of the above documents. The order merely contains a general observation that “no substantial activities which are charitable in nature are being carried out by the assessee”, without any examination or rejection of the documentary evidence placed before the authority. It is a settled principle of natural justice that when the assessee places relevant evidence on record, the authority must deal with such evidence and give reasons if it is to be rejected. In the present case, such exercise is missing. The Ld. CIT(E) has neither called for supporting bills or vouchers, nor made any adverse comments on the documents filed. At the same time, we find force in the contention of the Ld. DR that verification from primary evidence such as bills, vouchers, and beneficiaries is essential to determine whether the activities of the trust are in accordance with law.
6.2 In light of the above, and in the interest of justice, we are of the considered view that the matter needs to be restored to the file of the Ld. CIT(E) to adjudicate the assessee’s application for approval under section 80G of the Act afresh, after verifying the bills, vouchers, and other primary evidences to corroborate the documents already placed on record. We also direct the Ld. CIT(E) to consider the judicial precedents relied upon by the Ld. AR and to pass a speaking and reasoned order after granting adequate opportunity to the assessee. In view of the above discussion, the impugned order of the Ld. CIT(E) is set aside and the matter is restored to his file for fresh adjudication in accordance with law. The appeal filed by the assessee is treated as allowed for statistical purposes.